Dutt made his Bollywood film debut with the moderately successful Rocky in 1981. Dutt then went on to star in Vidhaata, the highest-grossing Hindi film of 1982, along with film veterans Dilip Kumar, Shammi Kapoor and Sanjeev Kumar. He also starred in movies like Main Awara Hoon (1983). In 1985, he shot Jaan Ki Baazi, his first film in two years.

The 1986 film Naam was a turning point in Dutt's career, it was a major critical and commercial success. Dutt appeared in successful films throughout the '80s such as Imaandaar, Inaam Dus Hazaar (1987), Jeete Hain Shaan Se (1988), Mardon Wali Baat (1988), Ilaaka (1989), Hum Bhi Insaan Hain (1989), Kanoon Apna Apna (1989) and Taaqatwar (1989).

His performances in both Kabzaa (1988) and J. P. Dutta's Hathyar (1989) were both well received by critics, although both films only managed average collections at the box office. In the late 1980s, he was seen in a number of multi-starrers alongside leading actors like Govinda, Mithun, Dharmendra, Jackie Shroff and Sunny Deol.
His successes continued in the 1990s, with films that include Tejaa (1990), Khatarnaak (1990), Zahreelay, (1990) Thanedaar (1990), Khoon Ka Karz (1991), Yalgaar (1992), Gumrah (1993), Sahibaan (1993) and Aatish: Feel the Fire (1994). He went on to star in some of the most era-defining Indian films of the early 1990s such as Sadak (1991), Saajan (1991) and Khalnayak (1993), earning two nominations for the Filmfare Award for Best Actor for the latter two.

The Hindu wrote that "Dutt's earlier films (like Naam and Sadak) got him a lot of favourable attention", and "Saajan established Dutt as the conventional soft hero." Saajan was the highest-grossing Bollywood film of 1991, and Sadak was the fifth highest grosser of 1991. Khalnayak became a blockbuster and was the second-highest grosser of 1993. This was followed by another box office success Gumrah, this was Dutt's second consecutive hit of the year.
Bombay (now Mumbai) suffered a series of serial bombings in 1993. Dutt was among several people associated with Bollywood who were accused of involvement. It was alleged that Dutt accepted delivery of weapons at his house from Abu Salem and co-accused Riyaz Siddiqui, who had also been implicated in relation to the Mumbai blasts. It was claimed that the weapons formed a part of a large consignment of arms connected to the terrorists. Dutt, however, in his confession stated that he took only one Type-56 from the producers of his movie Sanam, for his own family protection. It has also been reported that Sanjay Dutt's father Sunil Dutt's political rivalry caused Sanjay Dutt's conviction. Dutt's first film after his 1993 arrest was Daud (1997). It did average business at the box office despite getting a lot of publicity. This was followed by Dushman (1998) which did well financially.
1999 was an excellent year for Dutt and one that is regarded as his comeback, with all of his five releases being amongst the highest-grossing films of that year. He began it by starring in the Mahesh Bhatt-directed film Kartoos, followed by Khoobsurat, Haseena Maan Jaayegi, Daag: The Fire and Vaastav: The Reality, for which he won many awards, including his first Filmfare Award for Best Actor. His role in 2000's Mission Kashmir won him critical acclaim and a number of awards and nominations, including his fourth nomination for the Filmfare Award for Best Actor. Dutt was also invited by the President of India to Rashtrapati B…

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Dutt co-hosted the fifth season of the Indian reality show Bigg Boss along with Salman Khan. The show aired on Colors television from 2 October 2011 to 7 January 2012. Dutt later said it was Khan who persuaded him to co-host the show.
Dutt and entrepreneur Indian Premier League cricket team owner Raj Kundra together launched India's first professionally organised mixed martial arts league—the Super Fight League—on 16 January 2012.
While in jail, Dutt wrote some Hindi poetry, around 100 couplets, that he aims to release as a book in the future under the title Salaakhen (Lock Up).

In the early 1980, Dutt had a relationship with his co-star from his first film, Tina Munim. After this relationship ended, Dutt married actress Richa Sharma in 1987. She died of a brain tumour in 1996. The couple have a daughter, Trishala Dutt, born in 1988, who lives in the United States with her maternal grandparents.

Dutt's second marriage was to air-hostess-turned-model Rhea Pillai on 14 February 1998. The divorce finalised in 2008. Dutt married Manyata (born Dilnawaz Sheikh) first registered in Goa in 2008 and then, in a Hindu ceremony in Mumbai, after two years of dating. On 21 October 2010, he became a father to twins, a boy and a girl.
Earlier, Dutt used to identify with Islam, for example wearing Qur'anic verses around his neck, which Mahesh Bhatt attributed to his mother's family, Dutt also often frequenting his maternal uncle's house and thus his Muslim cousins. When the police interrogated him following the 1992-1993 Mumbai riots about an assault rifle he conceded getting from Anees Ibrahim, the brother of Dawood Ibrahim, he responded that "Because I have Muslim blood in my veins. I could not bear what was happening in the city."

In more recent years, Dutt has been connected more with Hinduism, and is considered a worshiper of Shiva. Dutt performed pind daan, a Hindu ritual that involves paying homage to the ancestors, for his deceased parents in January 2024.
Sanjay Dutt was diagnosed with stage 4 lung cancer. He took treatment in Mumbai and now has recovered from lung cancer.